This Week's 5 Dumbest Stock Moves

Stupidity is contagious. It gets us all from time to time. Even respectable companies can catch it. As I do every week, let's take a look at five dumb financial events this week that may make your head spin.

1. Orcs on the loose
Shares of Activision Blizzard (Nasdaq: ATVI  ) fell after the company revealed that the number of players for its World of Warcraft juggernaut slipped from 11.1 million to 10.3 million during its latest quarter.

Gee, I guess it's not just Netflix (Nasdaq: NFLX  ) that lost a whopping 800,000 net accounts during the months of July, August, and September.

It's a tough break for Activision Blizzard, since the revelation came on the day that the video game giant posted better-than-expected quarterly results and released the highly anticipated Call of Duty: Modern Warfare 3.

Bulls may argue that it's just a temporary blip, but massive multiplayer games don't just snap back into fancy. Diehard gamers appear to be heading elsewhere, and it's Activision Blizzard's hope that it can catch them somewhere else.

2. One way to ice down a hot coffee drink
Green Mountain Coffee Roasters (Nasdaq: GMCR  ) was roasted yesterday, after the company behind the Keurig single-cup brewing platform posted disappointing quarterly results. Even though the company expressed confidence during the call of its ability to predict demand, it did overestimate the number of K-Cups that were ultimately delivered during the period.

It's been several weeks since hedge fund guru David Einhorn blew holes in Green Mountain's bullish thesis, and Wednesday night's quarterly earnings call was the company's best shot at fighting back. It didn't, at least not effectively enough to ease investors' fears.

Green Mountain is now trading at just 17 times its guidance for its new fiscal year -- a sharp discount to slower-growing premium java companies -- but patent expirations and model sustainability are keeping multiple expansion in check.

3. Click-and-mortar retail
Wal-Mart (NYSE: WMT  ) is giving its online store a real-world boost.

A pair of Walmart.com stores have opened in Southern California shopping malls for the holidays. That's not a typo. Walmart.com is now rubbing elbows with the mall rats.

The stores are microscopic compared to the cavernous Wal-Mart Supercenters you know all too well. One of the two locations is just 1,000 square feet. Through the end of next month, these two stores will sell small hot media items and gadgetry, but they also have a fleet of laptops for mall shoppers to use to browse through the discounter's virtual aisles.

I think this is a brilliant move for Wal-Mart. This item winds up in the "dumb" list this week because I can't fathom what the mall owners were thinking. How can this not upset the more conventional tenants in these malls? They're not only competing against the everyday low prices of Wal-Mart, but now these stores are encouraging holiday shoppers to find better bargains online.

Mall Santa's not going to be happy.

4. Primo and proper
Investors expecting a big holiday bang out of Primo Water's (Nasdaq: PRMW  ) new Flavorstation line of home-based soda makers and flavors will have to wait.

Primo is now expecting just $1 million to $2 million in Flavorstation-related sales this quarter. Its inability to land material retail distribution outside of 500 home improvement stores and an ill-timed delay to reformulate its soda flavors will cost it the critical 2011 holiday shopping season.

This doesn't mean that Primo's flagship water business isn't doing well. Selling exchangeable three- and five-gallon bottles of drinking water has been a booming business for the company. However, the home-based pop play is off the table -- for now.

5. Flash flood
Adobe (Nasdaq: ADBE  ) shares took a hit after the company announced a corporate restructuring, but the biggest news out of the strategic shift is that Adobe will no longer support its Flash video platform for mobile devices.

Too many tech tastemakers are embracing the Flash-less HTML5 as the new online standard. This is naturally welcome news for Apple (Nasdaq: AAPL  ) , which has never supported Flash for its iOS devices. In fact, Android tablets and smartphones have tried to differentiate themselves from Apple's gadgetry by promoting Flash support.

Well, those marketing teams will now need to find a new angle.

If you want to track these companies to make sure that they don't make another dumb mistake soon, consider adding them to My Watchlist.

The Motley Fool owns shares of Apple, Activision Blizzard, and Wal-Mart Stores. The Fool owns shares of and has written calls on Activision Blizzard. Motley Fool newsletter services have recommended buying shares of Wal-Mart Stores, Adobe Systems, Green Mountain Coffee Roasters, Netflix, Apple, and Activision Blizzard. Motley Fool newsletter services have recommended creating a lurking gator position in Green Mountain Coffee Roasters, a diagonal call position in Adobe Systems, a bull call spread position in Apple, a diagonal call position in Wal-Mart Stores, and a synthetic long position in Activision Blizzard. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Netflix. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.


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  • Report this Comment On November 11, 2011, at 7:38 PM, ddbikessamsara wrote:

    Being as Primo's original 4Q guidance for Flavorstations was only $5-7 million this is hardly a "dumb financial move" The intent from the beginning was to introduce the product through direct marketing campaigns and work it into major retail channels as the bugs (such as reformulating flavors) were worked out. It was never planned or announced as a "critical" blockbuster holiday sales item - only that the product would be introduced in conjunction with a significant marketing campaign - which will in fact be the case. The product is real, very competitive with any Sodastream offering and easily purchased through the company's website and many Lowe's stores today. More direct sales channels will open up this quarter as well and next year Flavorstations will be available much more widely on retail shelf space.

    Once again Motley Fool has twisted reality in it's virtually endless series of fluff articles.

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